How I’d aim to make millions the Warren Buffett way

Story by Cliff D’Arcy

Thanks to decades of share-buying, my wife and I had amassed enough assets to retire in 2021. But I love financial writing and she’s great at her job, so we keep working. I also know that if I’d listened to my guru Warren Buffett earlier, we’d have millions more pounds today.
Thanks to his success as an investor, Buffett’s fortune exceeds $115bn. As a committed philanthropist, he’s already donated $55bn to good causes — and plans to give away 99% of his pot.

What I’ve learned
Though I’ve read so much about Warren, it took me way too long to learn from him. Here are five ‘Buffett bullet points’ that I wish I’d absorbed earlier.

1. Don’t lose money
   Investing is as much about avoiding losers as picking winners. Boy, have I backed some flops in my time: my three worst investments cost me around £1m. If I’d not bought this trio of losers, I’d have perhaps £2m+ more now.
   My biggest failures were caused by investing too heavily in a favoured stock, so I had too much concentration risk. Never again. Today, I make sure our money is spread widely across companies, sectors and countries.
2. Bet big on America
   Buffett has repeatedly warned investors: “Never bet against America.” How I regret not taking this advice to heart when young.

Nowadays, our family wealth is heavily skewed towards the US — including our global trackers, may of which are weighted 60% to 70% towards American stocks.

3. Buy businesses, not stocks
   In my early years of investing, I behaved more like a gambler or trader than a proper investor. In this effort to ‘get rich quick’, I made many mistakes.

One fundamental Warren Buffett lesson I’ve now absorbed is to buy companies rather than shares. Now I behave like an owner by only buying into businesses that I’d be willing to own for, say, a decade. And it’s this boring, long-term approach that has delivered my best returns from investing.

4. Investing is a marathon, not a sprint
   Chasing short-term gains when I was younger probably cost me more money than any other blunder. I’d buy shares, aiming to flip them for quick profits. Surprise, surprise, this tricky tactic kept backfiring.

Warren Buffett has said: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” This is my motto today when it comes to owning shares. I only buy stocks in solid businesses run by competent managers. And like Buffett, my ideal holding period is forever.

5. Don’t let a crisis go to waste
   These days, I’m not afraid of stock-market crashes, because they give me opportunities to buy into sound businesses at rock-bottom prices. As Warren Buffett urged in October 2008: “Be fearful when others are greedy, and greedy when others are fearful.”

For example, during the Covid-19 crash of spring 2020, my wife and I poured everything into shares after the US and UK stock markets had crashed by a third. And the returns from this one brave bout of buying have been life-changing.

££££££££££££££

Here’s hoping for the next market crash.